I particularly like that they talk about income subsidy as well.
I particularly like that they talk about income subsidy as well.
I finished reading an article in the NYT today again about the overheated housing market in the San Francisco Bay Area with a focus on Berkley. It pointed out the resistance among single family homeowners to doing anything differently to make housing a little more affordable. I also believe that people in these markets are going to be underwater if the Republican tax bill passes and they are limited on mortgage interest deductions and cannot deduct state and local taxes.
In any case it points out to me again how so many quality neighborhoods in both St. Louis city and county contain quality housing at a good price for buyers. I would think a marketing program to young people living on the coasts may be in order. What a bargain. We also have great cultural amenities and a short commute. These are all pluses. Why aren’t we marketing them? Written by Paul Dribin
The answer to this question is how you structure the problem. The National Low Income Housing Coalition has done the most work of any organization on this issue on a national level. They pose the problem by taking the median rental rate in the community and factoring in the minimum wage income. Not surprisingly they concluded that virtually now where in the United States is housing affordable.
There are several problems with this approach. The minimum wage is not a good indication of a community's earning capacity. Many minimum wage workers are students, part time workers, and those new to the work force. Many live with parents or double or triple up. Also most minimum wage workers don't remain at that pay level for a long time, as they move up the ladder. The minimum wage was never intended to be a living wage, rather just a starter for low skilled workers. Many minimum wage workers also work 2 or more jobs.
A better gauge of housing affordability is the relationship between the median income and the median rent. This gives us kind of an average, not perfect, but much better. Let's look at some numbers as a point of comparison:
St. Louis Metro Area
Median Income- $52243 for a family of 4 in the City of St. Louis
Median Rent -2 bedroom- $1291
Therefore the monthly median income of $4354 can afford a monthly rent of $1306 at the 30% threshold. This represents 100.01% of the median rent.
One may conclude that on the whole rent is affordable in the St Louis area for the median household.
Median rent-2 bedroom-$3166
Therefore the monthly income of $5654 can support a monthly rent of $1696 at the 30% threshold. This represents 54% of the median rent.
The Boston market on the whole is not affordable.
This approach seems to be useful in making comparisons among communities. It also does not relieve our community of our responsibility to provide affordable housing. After all, median income is a statistic. There are thousands of people in our metro area who cannot afford the median rent and do not have access to adequate rental housing.
Written by Paul Dribin
I have hesitated to write about this topic but here goes. As locals know, the President of the Regional Chamber, Joe Reagan has been under fire in the community and with his staff. Anonymous letters have been leaked to the newspapers. It is far beyond my pay grade to comment on Mr. Reagan or his organization.
The bigger picture, which has always fascinated me, is what to these organizations do? I am not sure. Dick Fleming, Reagan’s predecessor, was always bragging about his accomplishments, but population and jobs actually went down under his tenure. Do Chambers of Commerce make any sense in a worldwide economy?
I have also heard that the St. Louis Economic Development Partnership; a collaboration of the city and county economic development agencies is a mess. The leader of this organization is Rodney Crim. My source tells me the only thing they have accomplished is increasing salaries and high level staff.
The St. Charles County Economic Development Council, led by Greg Prestemon largely because they provide a business incubator. Greg and his staff have been supportive of innovative business change in St. Charles County including Workforce Housing.
I will write more about this subject in the future. The studies of researchers for years have shown that government economic development efforts do little and may actually operate at a net loss. Factors such as an educated workforce, progressive attitudes toward minorities and gay/lesbian populations does more than tax or other incentives to bring business. Written by Paul Dribin
Everyone knows there is a serious lack of affordable housing in this country. This gap contributes to homelessness, poor school performance, childhood trauma, and mental and physical health problems. The National Low Income Housing Coalition (NLIHC) presents a report every year which documents the housing affordability problems. They compare the minimum wage income to rents and then deduce the level of housing non affordability. They compare the monthly minimum wage income to the median rent in the area and calculate that anyone paying more than 30% of their income for rent is paying too much for housing.
Like I said, I am a big affordable housing advocate and understand the lack of affordable housing. I disagree with the methodology used in this study. Many minimum wage workers are students or retirees and do not expect to live on this income. Others double up with roommates to meet housing costs. Third most minimum wage workers do not stay at that salary level for long. I believe the average tenure at minimum wage is six months. For better or worse, minimum wage was never intended to be a living wage.
A more valid comparison would be between median salary and median rent. This statistic would still tell and alarming story, but the data would be more truthful. I have the highest respect for the National Low Income Housing Coalition. They do great work.
The mortgage interest deduction on federal income tax is by far the biggest housing subsidy available. It far surpasses Section 8, LIHTC, or other forms of subsidy. The major problem with this subsidy is because it primarily benefits higher income households. That is because a tax deduction only benefits households who itemize and those with a more substantial tax burden. Most of the benefit of this deduction goes to households earning over $200,000 a year. This program hurts central cities more than suburbs for the following reasons:
1. As stated before, less expensive houses provide less of a deduction to affluent purchasers. The present system actually provides incentives for middle and upper middle income households to buy more expensive homes which are generally located in suburbs.
2. Renters who are more common in the central city receive not subsidy at all.
The National Low Income Housing Coalition has a United for Homes campaign which attempts to rectify the housing tax deduction issue. The policy they advocated would limit deductions to $500000 of interest, and provide a 15% tax credit to households which would much more adequately address the needs of lower income homeowners. The billions in cost savings would be used to subsidize new affordable housing. Check out the website Unitedforhomes.org
I wanted to write again about Urban Homesteading, a program which I believe would be transformative for St. Louis and other communities. My previous work with this program in Milwaukee inspires my vision.
St. Louis has lots of vacant boarded houses in city possession. Urban Homesteading would allow for the transfer of these houses to individuals and families who agree to live in the houses and rehabilitate them to code. Title would transfer to the homesteader after successful completion of the rehabilitation. Some important caveats:
1. The rehab would need to be completed by professional contractors approved by the city. Sweat equity does not work in these situations.
2. The families selected for the program must be working and pass a screening. This will not work for people with significant social problems.
3. The properties must be carefully selected. They should be as close together as possible, and in a condition that allows for rehab.
St. Louis is working hard to attract young people to the city. This program can significantly help that effort.
I have done extensive work through the years on Workforce Housing, which is loosely defined as housing that is affordable for average working people. Barriers to this sort of housing are similar but a little bit more subtle than barriers to affordable housing. What I am talking about here is single family or attached units that are fairly small, 1200-1500 square feet, on a small lot.
The key barriers involve issues such as:
1. Zoning- Many times zoning laws do not allow multiple uses within a given area thereby requiring large lots and only single family homes to be constructed.
2. Land use- Again issues such as width of streets, sidewalks, and lot sizes drive up costs significantly.
3. Excessive levels of hearings and paperwork- Many times the permitting process is cumbersome and redundant. St. Charles County requires duplicate inspections by building inspectors and the fire department. All this costs money, adding to the cost of a home.
4. Historic preservation- This is largely a problem in the City of St. Louis. In that city virtually everything is considered historic. Rehab or construction of houses in these areas required intricate design and levels of approval. Costs increase significantly for historically compatible structures. Often, the house itself is not significant but is located in a historic neighborhood.
5. Resistance to manufactured housing- Factory build manufactured housing is much cheaper to construct, is safer, and more energy efficient. Many communities still do not allow for this type of housing.
6. Resistance from neighbors- People who own larger homes are resistant to communities of smaller ones. Consequently we get zoning and land use requirements that require minimum lot and house sizes, thereby driving up costs. Research shows that quality built smaller homes actually add to the value of their more expensive counterparts.
These issues can all be addressed through government and community leadership and common sense and do not require funding. Conservatives and liberals alike should be happy to address these issues. Inclusionary zoning could be one tool to address this but it has proved too politically charged to work in most communities.